2014-04-25 07:00:00 CEST
2014-04-25 07:00:05 CEST
REGULATED INFORMATION
YIT - Interim report (Q1 and Q3)
Interim Report January 1 – March 31, 2014: Moderate development in Housing, challenges in Business Premises and Infrastructure
Helsinki, Finland, 2014-04-25 07:00 CEST (GLOBE NEWSWIRE) -- YIT CORPORATION
STOCK EXCHANGE RELEASE APRIL 25, 2014 AT 8:00 A.M.
INTERIM REPORT JANUARY 1 - MARCH 31, 2014:
Moderate development in Housing, challenges in Business Premises and
Infrastructure
Unless otherwise noted, the figures in brackets refer to the corresponding
period in the previous year.
January-March 2014 (Segment reporting, POC)
-- Revenue decreased by 11% to EUR 403.1 (452.0) million. At comparable
exchange rates, revenue decreased by 6%.
-- Operating profit amounted to EUR 26.9 (35.9) million and operating profit
margin was 6.7% (7.9).
-- The order backlog remained at the level of the end of 2013, amounting to
EUR 2,696.7 million.
-- Operating cash flow after investments amounted to
EUR -12.3 (-5.3) million
Guidance for 2014 remains unchanged
The Group revenue based on segment reporting is estimated to grow by 0-10% at
comparable exchange rates. The operating profit margin based on segment
reporting is estimated to be in the range of 7.5-8.5% excluding non-recurring
items.
Continuing uncertainty over the general macroeconomic development impacts YIT's
business operations and customers. Prolongation and potential escalation of the
Ukrainian crisis would probably have a negative effect on YIT's business
operations.
Kari Kauniskangas, President and CEO:The market situation remained challenging in the first quarter, and the
Ukrainian crisis increased the uncertainty in our operating environment. In
Russia, our housing sales were boosted in February-March by consumers looking
to shift their assets to fixed property. Prolongation and potential escalation
of the crisis would probably have a negative effect on our business operations.
With respect to the Housing segment, we can be satisfied with our strong growth
in the number of apartments sold in the first quarter in Russia, the Baltic
countries and Central Eastern Europe. The result we achieved in Finland was
fair considering the prevailing market environment. The weak development of our
business premises operations, combined with lower volume in infra services due
to seasonality and the timing of projects, meant that the Business Premises and
Infrastructure segment achieved only a modest result.
In 2014, our priorities are customer focus, cost-efficiency and improving cash
flow as well as capital efficiency. We are engaging in measures to further
improve the customer experience, perceived quality and digital services, as
well as introduce new concepts in response to customer needs. The prevailing
demand is currently focused on cost-efficient premises. In product development,
we emphasise design management, affordability of the products and achieving
volume advantages in purchasing. To improve cash flow, we systematically
implement the measures we have promised to normalise the number of completed
unsold apartments and business premises, release slow-moving assets and build
off-balance sheet partnerships to support our plot acquisitions. Cash flow and
return on investment will remain key criteria for management remuneration in
2014.
Key figures
Segment reporting, POC
EUR million 1-3/14 1-3/13 Change 1-12/13
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Revenue 403.1 452.0 -11% 1,858.8
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Housing 281.3 286.2 -2% 1,152.2
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Finland, the Baltic countries and Central 172.9 188.6 -8% 656.2
Eastern Europe
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Russia 108.5 97.6 11% 496.0
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Business Premises and Infrastructure 121.1 158.8 -24% 688.9
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Other items 0.7 7.0 17.8
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Operating profit 26.9 35.9 -25% 152.8
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Operating profit margin, % 6.7% 7.9% 8.2%
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Operating profit excluding non-recurring 26.9 35.9 -25% 154.0
items
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Housing 28.9 35.0 -17% 136.3
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Finland, the Baltic countries and Central 16.8 22.4 -25% 66.2
Eastern Europe
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Russia 12.2 12.6 -3% 70.2
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Business Premises and Infrastructure 0.2 3.1 -94% 31.0
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Other items -2.3 -2.2 -13.4
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Operating profit margin, % 6.7% 7.9% 8.3%
excluding non-recurring items
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Housing 10.3% 12.2% 11.8%
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Finland, the Baltic countries and Central 9.7% 11.9% 10.1%
Eastern Europe
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Russia 11.2% 12.9% 14.1%
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Business Premises and Infrastructure 0.2% 1.9% 4.5%
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Profit before taxes 18.2 30.6 -41% 122.8
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Profit for the review period1 14.3 23.4 -39% 93.9
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Earnings per share, EUR 0.11 0.19 -42% 0.75
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Operating cash flow after investments -12.3 -5.3 -87.9
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Return on investment (last 12 months), % 10.2% 15.0% 10.3%
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Equity ratio at end of period, % 35.0% 40.7% 37.8%
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Order backlog at end of period 2,696.7 2,710.2 0% 2,713.7
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1 Attributable to equity holders of the parent company
Group reporting, IFRS
EUR million 1-3/14 1-3/13 Change 1-12/13
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Revenue 403.2 445.6 -10% 1,743.0
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Operating profit 23.2 31.0 -25% 104.0
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Operating profit margin, % 5.8% 7.0% 6.0%
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Profit before taxes 18.8 30.3 -38% 95.0
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Profit for the review period1) 14.6 22.9 -36% 70.3
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Earnings per share, EUR 0.12 0.18 -33% 0.56
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Operating cash flow after investments -12.3 -5.3 -87.9
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Order backlog 3,146.4 3,045.9 3% 3,184.6
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Invested capital 1,555.8 1,445.5 8% 1,556.2
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Return on investment (last 12 months), % 7.0% 14.3% 7.0%
(figures for 3/13 non-IFRS)
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Effective tax rate, % 22.4% 23.7% 26.1%
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3/14 3/13 Change 12/13
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Net interest-bearing debt, EUR million1 840.3 677.7 24% 781.7
----------------------------------------------------------------------
Gearing ratio, % 1 132.1% 94.0% 112.0%
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1(3/13 non-IFRS)
Events after the review period
YIT's residential sales in Finland, the Baltic countries and Central Eastern
Europe have been at a normal level in April. In Russia, activity in the housing
market has slowed down slightly compared to the first quarter.
After the review period, YIT signed an agreement on selling the Bisnespaja Avia
business premises in Aviapolis, Vantaa, Finland, to the non-UCITS Fund
OP-Vuokratuotto.
Market outlook for 2014
Housing
In the long term, residential demand in Finland will be supported by migration
to growth centres. Furthermore, the population and the number of households
will increase with continued migration and the increasing number of one-person
households. YIT estimates that the demand for small apartments, in particular,
will remain good.
According to RT's (Confederation of Finnish Construction Industries) April 2014
estimate, the construction of 26,500 apartments will start in Finland during
2014. According to a report published by VTT Technical Research Centre of
Finland in January 2012, the annual need for the production of new apartments
amounts to 24,000-29,000 apartments. YIT's goal is to strengthen its position
as the leading housing developer in Finland.
YIT estimates that housing prices in Finland will remain stable in 2014. The
increase in construction costs is expected to be moderate in 2014. The interest
rates of mortgages are forecasted to remain low, and slight improvement in
consumers' access to financing is expected. However, the macroeconomic
uncertainty and the consumer confidence under the long-term average will
continue to affect the Finnish housing market.
Residential demand in the Baltic countries is expected to be supported by
economic growth. Furthermore, the poor condition of residential buildings
creates a need for new high-quality apartments. The volume of residential
construction is estimated to grow in the Baltic countries (VTT Technical
Research Centre of Finland, December 2013). Euroconstruct estimated in November
2013 that residential start-ups will decline slightly in the Czech Republic and
Slovakia in 2014. In the Baltic countries and Central Eastern Europe,
residential prices are expected to increase slightly.
The volume of housing construction is estimated to continue growing in Russia
in 2014, but the growth is expected to slow down somewhat from the level in the
previous years (VTT Technical Research Centre of Finland, December 2013). YIT
expects residential prices in Russia to remain stable in 2014. Residential
demand has been supported by low unemployment rates and favourable development
in the mortgage market. Moreover, the increase in the interest rates on
mortgages has levelled off in recent times. Forecasts of economic growth in
Russia have been lowered recently and the Russian ruble has weakened
significantly against the euro. Prolongation and potential escalation of the
Ukrainian crisis would probably have a negative effect on YIT's business
operations.
The long-term outlook for Russian residential construction is good. Living
space per person is still clearly lower than in Western Europe and housing is
in poor condition, which creates the need for new, high-quality housing.
Furthermore, the middle class is expected to grow in proportion to the
population and the number of household-dwelling units is expected to increase.
The development of the mortgage market in Russia has also contributed to the
expansion of the potential buyer base. YIT has promoted the availability of
mortgages to consumers through extensive cooperation with partner banks.
Business Premises and Infrastructure
The business premises market is expected to continue to be weak in Finland in
2014. Real estate investors are still cautious due to the general economic
situation and, in order to control risks, the Helsinki metropolitan area and
good tenants are appreciated. The low level of long-term interest rates
increases investors' interest in high-yield properties. Vacancy rates for
offices are still high, with vacant building stock also including relatively
old office premises in poor condition. YIT believes that the demand will focus
on modern and energy-efficient offices. Commercial construction is maintained
by investments in retail trade and the expansion of foreign retail chains in
the Finnish market. Vacancy rates for commercial premises are rather low.
In the Baltic countries, business premises construction is estimated to
increase by 5% in 2014 (VTT Technical Research Centre of Finland, December
2013). In Slovakia, business premises construction is expected to decrease by
8% in 2014 (Euroconstruct, November 2013).
Infrastructure construction is estimated to decrease slightly in comparison
with 2013 (Euroconstruct, November 2013). The competition is tight, especially
for smaller contracts.
News conference for investors and media
YIT will arrange a news conference on April 25, 2014 at 10:00 a.m. Finnish time
(EEST) at YIT's head office, Panuntie 11, 00620 Helsinki, Finland. The event is
in English and targeted for analysts, portfolio managers and the media.
Webcast
The news conference and presentation by the President and CEO of YIT
Corporation Kari Kauniskangas can also be followed through a live webcast at
www.yitgroup.com/webcast. The live webcast starts at 10:00 a.m. (EEST) and a
recording of the webcast will be available at approximately 12:00 p.m. (EEST)
at the same address.
Conference call
The news conference can be participated also through a conference call.
Conference call participants are requested to dial in at least five minutes
prior to the start of the conference, at 9:55 a.m. (EEST), to number +44
2033645372.
During the webcast and conference call, all questions should be presented in
English. At the end of the event the media has the possibility to ask questions
also in Finnish.
Schedule in different time zones
Interim Report The investor and Recorded
published analyst webcast
event, conference available
call
and live webcast
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EEST (Helsinki) 08:00 10:00 12:00
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CEST (Paris, 07:00 09:00 11:00
Stockholm)
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BST (London) 06:00 08:00 10:00
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US EDT (New York) 01:00 03:00 05:00
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YIT CORPORATION
Kari Kauniskangas
President and CEO
For additional information, please contact:
Timo Lehtinen, Chief Financial Officer, YIT Corporation, tel. +358 45 670 0626,
timo.lehtinen@yit.fi
Sanna Kaje, Vice President, Investor Relations, YIT Corporation, tel. +358 50
390 6750, sanna.kaje@yit.fi
Distribution: NASDAQ OMX, principal media, www.yitgroup.com
YIT is a construction industry leader. We create better living environments in
Finland, Russia, the Baltic countries, the Czech Republic and Slovakia. Over
100 years of experience have secured for us a strong market position: We are
the largest housing developer and one of the largest business premises and
infrastructure developers in Finland, and the most significant foreign housing
and area developer in Russia. Our vision is to stay one step ahead - while
caring for our customers, partners and personnel. We have more than 6,000
employees in seven countries. In 2013, our revenue amounted to nearly EUR 1.9
billion. Our share is listed on Nasdaq OMX Helsinki. www.yitgroup.com
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